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Group Lending, Joint Liability, and Social Capital: Insights From the Indian Microfinance Crisis

Haldar, Antara; Stiglitz, Joseph E.

This article grapples with the causes of India’s microfinance crisis. By contrasting Bangladesh’s highly successful Grameen model with the allegedly “universalizable” version of India’s SKS Microfinance (which precipitated the crisis), trust or social capital is isolated—not just narrowly interpreted within standard economic theory, but more broadly construed—as the essential element accounting for the early success of microfinance. It is argued that the microfinance experience has been widely misinterpreted, in both analytical and policy terms. This article suggests inherent limits in extending the model to for-profit institutions and, in particular, to the pace of scaling up.

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Also Published In

Title
Politics & Society
DOI
https://doi.org/10.1177/0032329216674001

More About This Work

Academic Units
Economics
Published Here
February 5, 2019
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